Tell a millennial to invest in his or her future and you will most likely get an eye roll, or, for the more sophisticated and mature, a dry snort. They just don’t invest. Chalk it up to staggering student loans increasing every year, collectively owing $1 trillion, up from only $461 billion eight years ago, according to a study by the Federal Reserve Bank of NY. Or to the two financial crises they’ve lived through while watching their parents struggle to make ends meet, or just to a lack of education on the matter. Call it what you want, but the fact remains that a staggering 93% of millennials are not confident enough to invest. And that means they’re making a major mistake.

With Social Security reserves shrinking, the population growing, and an economy that’s hiring far fewer college graduates than years before, it’s imperative that when those millennials do find a job, their Millennials - Confidence in Investingvery first payment (post rent, student loans, and other living necessities) is to their retirement fund. But the how of going about planning for your retirement remains to be seen.

If you’re not quite ready to jump into a program – maybe you don’t have the money set aside or you’re still wary of investing at all – MyRetirementPlan is providing a crash course on investment in your 20s. Take a seat, and let’s get started.

Step 1: Key words and terms of the investment landscape

Your best friend will be Investopedia while you muddle through this process.

  • 401(k): A word thrown around often in new jobs and among your parents, but do you really know what it is? Here you go: it’s a tax code, a line number (401(k)) from the IRS that “allows employers to establish a company-sponsored retirement plan,” (Smart401k). The company you work for will determine what investment plans they offer, usually a defined benefit or a defined contribution.
    • The idea behind a 401(k) is that you contribute, your employer contributes, and when you retire, you can access that money to get you through the rest of your life.
  • IRA: Individual Retirement Account. You can’t withdraw these in full until you’re over 59 and a half. However, if you don’t want to touch the money until you’re ready to use it for retirement, this option can lower your taxable income in the year you contribute to it. In turn, you get to qualify for other tax breaks like the student loan interest deduction due to your adjusted gross income.
  • Roth IRA: You can take these contributions out whenever you want, penalty-and tax-free, but not the gains earned on the contributions until age 591/2. If you are over age 591/2, your first contribution needs to be at least 5 years old to begin taking out distributions that include the gains earned on your contributions.

Step 2: Make a Spreadsheet.

Break out that Excel page and get to work on some tables, graphs and budget drafts. Figure out where you’re spending your money, where you want to save it and where you want your retirement funds allocated.

Step 3: Open the account

…and start contributing, to that, your debts, and your 401(k). Make it a habit to contribute the maximum amount to your 401(k) up to your employer’s match, because your employer is essentially giving you free money for after retirement. Take full advantage, because the more you contribute, the more they do, too.

Step 4: Use the tools and resources available on the web

First and foremost, remember to use MyRetirementPlan to understand and take control of your personal finances and investments. Planning now can save you thousands later, improve your quality of life, and ensure that you won’t be working through your 60s to pay for the mistakes you made in your 20s.

Savings jarPlanning for the future can often be more terrifying than any horror movie. The future is a large part of our lives though. Let’s talk retirement.

On average, Americans spend 20 years in retirement, and as time goes by people are living longer so 30 years is what most planners use today. Have you calculated what you need for retirement? The odds say you haven’t, as less than half of Americans have calculated what they need to save to have a secure retirement plan. The facts are, saving can be scary and planning is easier said than done. It’s easy to find yourself saying that you’ll start saving when your life is more secure and stable. News flash: There will always be competing demands for your money. Your life will always be something to save for, pay off, or to tempt you to splurge on. There is never a financially perfect time to start saving money.

The first step for investing in your future is to start saving. No excuses or procrastinating; the time to start saving begins now. Even if your budget allows for meager savings, practice makes perfect and it is time to get started! Setting up an automatic transfer to savings accounts is an excellent way to begin learning how to save. When you begin adjusting to having less, you create the practice of saving and you can increase your savings with pay raises and set aside bonuses. If your budget allows it, experts suggest savings in a rule of minus ten. If you are in your 20’s you need to save 10% of your income, in your 30’s you save 20% of your income, and so on and so forth.

Don’t let the rule of minus ten intimidate you. Even if you can’t meet that goal, everyone has to start saving somewhere. Save as close to that number as you can for optimal results that accommodate your lifestyle. Once you have developed the habit of saving, it is important to do your research for how much you need to save to have a secure retirement. From retirement planning websites to financial advisors, the world is at your fingertips with resources to aid you in obtaining this information in a way that suits you best. Once you are aware of what you need, you can begin to make a savings plan to meet your individual needs and desires for your future.

Although you can (and many have) write a book on the different ways to invest, allow me to touch upon the more simple ways to save. You would be hard pressed to find someone in the workplace who has not heard of a 401(k). A 401(k) is a company sponsored plan that provides employees with automatic savings and tax incentives. And sometimes the company will match what is saved. Individual Retirement Accounts (also known as IRAs) are another common way of investing for the future. They are individual savings accounts that allow you to direct pretax income towards investments that can grow. There are also Roth IRAs that are similar to the other two except that what goes in has already been taxed. So when the money is taken out, there are no tax deductions or surprises. In addition to putting your money in safe ways to save, there are also the higher risk, higher reward ways to save in regards to portfolio investments such as stocks and bonds. Stocks and bonds allow for investments that can fluctuate based upon the stock market or interest payments.

One of the biggest aspects to investing in your future is being practical and pragmatic with your finances. Setting aside money every month is essential, but there’s more to it than saving for retirement. Having an emergency fund in case something goes wrong will be a blessing when the time comes. There is much of life you cannot plan, being prepared for what you cannot expect will take away some of that extra stress. If you can spare it, financial experts suggest having three to six months worse of expenses saved for emergencies.

Avoiding debt is imperative to investing in the future as well. Make an effort to not use and abuse credit cards and to work steadily on paying off student and other loans. Debt can build rapidly and quickly take away from your investments. Above all, don’t touch your savings accounts. Let them sit and compound interest. Keep your emergency funds for emergencies and allow your savings to marinate with interest over the next few decades. You’ll thank me later.

Planning for the future doesn’t have to be terrifying. Retirement doesn’t have to be a threat of living in poverty for the last twenty years of your life. The quicker you can start saving, the better. As you come into your own, eventually the amount you can put away will increase. Managing your finances is like learning to increase your workout stamina. For awhile, you’ll be miserable, then one day you’ll notice it’s not nearly as difficult and you can push yourself even further. Invest in yourself, plan for the future, never be afraid to ask for help, seek assistance from knowledgeable financial advisors, and let that interest grow. The sooner you begin saving for your future the sooner you can turn a secure future into your secure present.